CMC Markets Lowers FY24 Outlook, Shares Tumble

CMC Markets Lowers FY24 Outlook, Shares Tumble

Time Stamp: August 25, 2023 4:07 AM
Source Node: 2843155

CMC Markets (LON: CMCX) has released a trading update today (Friday), revealing its expectations of a lower net operating income between £250 and £280 million for the fiscal year 2024. It is significantly lower than a consensus estimate of £334.8 million.

The London-listed broker highlighted that “subdued market conditions have continued through August with trading and investing net revenues trending 20% lower year-on-year. August, in particular, has seen a more challenging environment with markedly lower monetization of client trading activity due to a higher proportion of lower margin institutional volume.”

However, the broker pointed out that “underlying market activity has the potential to recover.”

Following the trading update, the share price of CMC Markets dropped almost 20 percent as trading opened on Friday morning, before showing some recovery. Year-to-date, CMC stock prices have declined by more than 55 percent.

CMC Markets shares on Friday

Are the Good Days for Brokers Over?

CMC Markets is one of the few publicly listed brokers with a wide range of offerings, including contracts for differences (CFDs), spread betting, stock trading, and even institutional products.

In March 2023, the fiscal year ended with a net income of £288.4 million for CMC, which was an increase of 2 percent from the previous year. The net trading revenue from CFDs and spread betting was £233.1 million, which was only 1 percent more than the last year. However, the net revenue from the investing stream dropped 21 percent to £37.9 million. On the other hand, it earned £13.9 million from interest income, compared to £0.8 million in the year before.

In the latest update, the company said that: “Core KPIs including client money, assets under administration, and active clients across both the trading and investing businesses remain robust with no material change seen through recent weeks.”

Further, the management of the company is expecting “operating costs excluding variable remuneration are unchanged at £240 million.”

CMC Markets (LON: CMCX) has released a trading update today (Friday), revealing its expectations of a lower net operating income between £250 and £280 million for the fiscal year 2024. It is significantly lower than a consensus estimate of £334.8 million.

The London-listed broker highlighted that “subdued market conditions have continued through August with trading and investing net revenues trending 20% lower year-on-year. August, in particular, has seen a more challenging environment with markedly lower monetization of client trading activity due to a higher proportion of lower margin institutional volume.”

However, the broker pointed out that “underlying market activity has the potential to recover.”

Following the trading update, the share price of CMC Markets dropped almost 20 percent as trading opened on Friday morning, before showing some recovery. Year-to-date, CMC stock prices have declined by more than 55 percent.

CMC Markets shares on Friday

Are the Good Days for Brokers Over?

CMC Markets is one of the few publicly listed brokers with a wide range of offerings, including contracts for differences (CFDs), spread betting, stock trading, and even institutional products.

In March 2023, the fiscal year ended with a net income of £288.4 million for CMC, which was an increase of 2 percent from the previous year. The net trading revenue from CFDs and spread betting was £233.1 million, which was only 1 percent more than the last year. However, the net revenue from the investing stream dropped 21 percent to £37.9 million. On the other hand, it earned £13.9 million from interest income, compared to £0.8 million in the year before.

In the latest update, the company said that: “Core KPIs including client money, assets under administration, and active clients across both the trading and investing businesses remain robust with no material change seen through recent weeks.”

Further, the management of the company is expecting “operating costs excluding variable remuneration are unchanged at £240 million.”

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